IMF for linking SBP autonomy with performance

ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistani authorities to link autonomy of the State Bank of Pakistan (SBP) with accountability and performance.

The tenure of SBP Governor must be delinked from political cycle as it can be extended from term of three years to five, six or seven years depending upon the choice of the government.

One key recommendation coming from IMF might link last three years in tenure of SBP Governor with his performance of first three years in office. How the performance will be evaluated if there is no specific and well- designed targets, the sources questioned.

Under the IMF structural benchmark condition, the PTI government will have to table amendments into SBP Act by end of December 2019 before the Parliament. A technical mission of IMF has been currently visiting Pakistan for recommending key policy measures in the upcoming amendments into SBP Act in order to ensure its autonomy. Some key posts are also falling vacant including Deputy Governor SBP (Policy) and Director Monetary Policy so the Fund’s safeguard assessment mission is also asking to fill the key posts. The autonomy and independence of the central bank is long awaited wish list of the IMF. The IMF raises question that the SBP lost over $9 billion for keeping exchange rate overvalued so there should be some accountability mechanism to fix responsibility who pursued wrong policies.

Citing example, the IMF high-ups argued that the minutes of Monetary Policy Committee (MPC) were made public in many countries of the world so that masses could judge what kind of policies were recommending by the each member of the MPC. The minutes of MPC should be made public here in case of Pakistan, they added.

“The visiting safeguard assessment mission of IMF is preparing key policy measures to ensure mechanism for undertaking accountability and gauging performance” top official sources confirmed to The News here on Friday. Although, the SBP envisaged moving towards targeting inflation but it is yet to see how they proceeded in months ahead.

An update safeguards assessment of the SBP has already been initiated and the mission is expected to finalize its recommendations very soon.

To build a stronger institutional framework, the government has made commitment with the IMF that it will amend the State Bank of Pakistan Act to strengthen its autonomy, governance, and mandate.